How SCOTUS could help Congress save billions

Congress could stumble into a big pile of cash from an unlikely source: the Supreme Court.

The justices will deliver their landmark ruling on the 2010 health care law this month, and the government is in line to reap hundreds of billions of dollars in savings — perhaps more than $1 trillion — if certain parts of it are struck down.

Text Size

-

+

reset

That money could be freed up just in time for a battle over whether automatic cuts to the Pentagon and social programs will kick in, and some members of Congress are already dreaming about the possibilities.

“We’re thinking [about] different options, but there are so many variations of what could happen from the court decision, it’s hard to make any hard plans,” said House Appropriations Committee Chairman Hal Rogers (R-Ky.). But, he added, a windfall “would be a factor” in discussions about whether to keep in place pending Pentagon cuts.

The math is complicated, but the premise is simple. If the court kills just the parts of the law that cost money, while leaving in place new taxes and spending cuts, that would leave more cash on the government’s books. If the whole law is struck down, the deficit would actually go up a bit. And if it’s upheld, there’s no change at all to the budget.

The Congressional Budget Office estimates that eliminating the law’s individual mandate would save $282 billion over 10 years, a figure based on 16 million fewer people signing up for health care through Medicaid, new health exchanges and private insurance.

Bill Hoagland, a vice president at the insurance company Cigna and the former top Senate Republican budget aide, says that number would jump to more than $500 billion through 2022 if the mandate and related insurance market reforms, such as the requirement that insurers provide coverage for people with pre-existing conditions, are struck down. And there’s even more money at stake in the law’s expansion of Medicaid and the Children’s Health Insurance Program, which the court reviewed alongside the individual mandate, during oral arguments in March.

If the court throws them all out but keeps revenues in place, the savings could eclipse $1 trillion.

Hoagland said he can’t remember a court decision that “could have that significant an impact on the baseline that CBO is operating with.”

No one knows what the court will do — it could uphold the law, strike down parts of it or knock down the whole damn thing. If the law is upheld, the budget picture doesn’t change. If it’s struck down in its entirety, deficit projections would most likely go up by $100 billion to $150 billion over 10 years. But it’s the prospect of a partial strike-down that has some folks on Capitol Hill licking their chops.

“Everyone seems to agree, at the 30,000-foot level, it changes the overall debate in a big way,” said a Senate GOP aide.

Specifically, a windfall could provide more wiggle room when the White House and Congress have to untangle a jumble of budget-related policy issues at the end of the year. That mess includes an imperfect storm of politically charged matters such as the implementation of a planned $1.2 trillion sequester — or cut — split between defense and domestic programs and the scheduled expiration of the Bush tax cuts.

The Affordable Care Act could be a potent Job Creator because it allows individuals to access their own health insurance independent of their employer. Viable individual insurance frees small businesses from the cost burden of providing employee health insurance. Small business hiring can increase as the cost of labor decreases. It would be an easy fix to relieve any business from a mandate penalty when individuals can choose to buy their own personal plan under reasonable terms.

Currently, businesses that can't afford to offer health insurance are at a disadvantage for hiring the best workers. Individual insurance access will offset the unfair competitive advantage that huge corporations enjoy by providing health insurance that is cheaper based on the of the employee pool, or cheaper still via ERISA self-funding. ACA could be a small business equalizer that will help to restart the economy through employment of workers who don't need employer insurance because they can get it on their own. Some of these smaller employers may negotiate a higher wage in lieu of insurance. That's one reason why the big corporations are so desperate to kill ACA. The other reason is the 100% tax deduction they exploit with health insurance - a benefit not availabe to individual filers.

Most important, ACA requires our elected members of Congress to access the same insurance options as their constituents. This assures that we all have a reasonable menu of choices in the exchanges because members of Congress will not deny themselves. Apparently, most members of Congress prefer to retain their privileged "cadillac plan" at the exclusion and expense of constituent taxpayers.

If SCOTUS kills ACA, Democrats should run on a platform of providing universal individual health insurance access to the Congressional health plan menu, and make it a full, 100% tax deduction on individual tax returns. Why should members of Congress - and Supreme Court Justices, for that matter - have a privileged health insurance plan that excludes constituents? Why do so many voters tolerate this hypocrisy?

Here is the hypocrisy of every GOTP representative and candidate, including Romney - they signed the Norquist pledge to not raise taxes, and yet they all complain that 46% of Americans "don't pay taxes", so they promise to "broaden the base" by RAISING TAXES ON LOWER INCOME WORKING AMERICANS.

Meanwhile, every single lower income working American pays FICA and Medicare tax from the first dollar of income, and their employer pays a match (the full employment penalty tax). All "earned income" (aka work) above $110,000 is exempt from FICA - an incentive to hire fewer workers at higher income. ALL "unearned income" above $0 is exempt from FICA and Medicare tax - an incentive to shift income from salary (that pays up to 35% income tax + payroll tax) to stock, dividends, "carried interest" (that pays 15% income tax + 0 payroll tax).

Some make the dubious claim that a tax on dividend income is "double taxation" because the corporation pays income tax first, the investor second. (Dubious because many corporations pay little to no income tax) Solve the problem by creating a business tax deduction for dividends paid, and apply ordinary income tax for the individual and fund and trust and other entity that receives the dividend, exempt qualified retirement plans.

The truth about conservative opposition to the Affordable Care Act is the tax effect. The Affordable Care Act imposes a new 3.8% tax on individual income above $200,000 including investment income. This tax does not create a loophole or preference based on source of income. This income is already free from FICA and Medicare tax - so why is this not fair?

All personal income, regardless of source, should be subject to a common progressive tax rate schedule. Reagan did this in 1986, but the top 28% rate was far too low and the resulting deficit was far too high. H.W. Bush addressed this by raising earned income tax (31% "bubble group") while retaining a lower 28% rate for capital gains. H.W. continued to drive high deficits with inadequate revenue. Clinton adjusted the tax rate schedule with higher top rates and generated a budget surplus, but kept the cap gains preference. The separation of capital gains income from working income has been the bane of our tax system ever since as W & Cheney dropped cap gains and dividend income tax rate to 15% while keeping this windfall exempt from Social Security and Medicare payroll taxes.

As if this isn't enough, GOTP wants to make all cap gains and dividends and inheritance/gifts exempt from any tax - permanently! Romney and his billionaire backers are willing to trash our economy and destroy our middle class to avoid a FAIR tax and hoard ever greater national wealth. Obscene amount of wealth is so valuable to these people that they have pledged to raise a Billion Dollars to feed Superpacs that don't disclose contributors and are unaccountable to honest ethics. Romney funders have corrupted our government with a coercive Pledge of Allegiance to Gridlock Grover - an Oath of Obstruction toward making a permanent preference for "investment income" and inheritance windfall, while those who labor for a living bear the brunt.

30 years of Tinkle Down Economics: GOP Redistribution of American Income (1980 vs. 2009).

The share of national AGI (adjusted gross income) for the bottom 90% of American taxpayers DECREASED from 67.9% in 1980 to 56.8% in 2009. The share of national AGI (adjusted gross income) for the top 10% of American taxpayers INCREASED from 32.1% in 1980 to 43.2% in 2009 - and most of this income transfer went to the top 1%.

Compared to 1980, 8.4% of 2009 national income was transferred from the bottom 90% of American taxpayers to the top 1%. Total 2009 national AGI was about $7.7 trillion. At 8.4%, almost $650 billion in yearly consumer income was transferred from the bottom 90% of Americans (who drive our consumer economy) to the top 1% (who sequester private wealth) in 2009. This is not just a "middle class" problem.

Change in share of national AGI for various income groups from 1980 to 2009 (data from IRS taxstats website):

Top 1% AGI share increased, ironically, by 99% (8.5% to 16.9%);

Top 5%-1% AGI share increased 18% (12.5% to 14.8%);

Top 10%-5% AGI share increased 3.6% (11.1% to 11.5%);

Bottom 90%-75% AGI share decreased 8.1% (24.6% to 22.6%);

Bottom 75%-50% AGI share decreased 19% (25.6% to 20.7%);

Bottom 50%-AGI share decreased 24% (17.7% to 13.5%).

2009 median taxpayer AGI was about $32,400. No matter how one defines "middle class", this is the middle of the middle. (Take note, Mitt)

America's working middle class has been crushed, while Congress pays itself a base salary of $174,000 + expenses + pension + healthcare. America's inclusive economy has been undermined by a relentless 30-year campaign of tax and regulatory actions by Congress to favor individuals and entities that finance political campaigns, starting with Reagan tax in 1982 and continuing through extension of Bush tax in 2010. Our elected "representatives" have ensured that the rules they enact to benefit their campaign financiers also benefit themselves - usually at the cost and exclusion of the vast majority of constituents. As Warren Buffet says, Congress enacted the rules to allow economic damage. But we voters must blame ourselves for electing Congress.

Our government has become opaque. Our "representatives" have insulated themselves from the daily financial and social experiences of everyday citizens (at taxpayer expense). Congress and media propaganda have made it impossible for voters to reliably identify which of our elected officials are truly representing the interests of their local majorities.

While there may be a handful of "keepers" in Congress, in 2012 America needs to reboot the system by casting out every single R/D incumbent and replacing them with 435 Representatives and 33 Senators from neither major party. If we make a mistake, we can always re-elect the "keepers" in the next election.

Kill the whole mess - The Obamacare bill is a joke, a travesty and an excercise in corruption. It was written by an for special interests - no one read it - no one understood it. Obama has his name on a bill he doesn't understand, never read and can't argue in court. Now the media is trying to justify Obama's existance - Dump it and dump it now

All the talk of money aside, the key issue facing the SCOTUS is not fiscal, it's constitutional. The U.S. Constitution is not a fiscal document, it is the foundation of our governmental structure and a stark-line limitation on what the government can do to the citizens of this nation. The fiscal concerns are primarily issues created by the government. Reversing the government's intrusion will resolve a lot of these concerns.

If I was a betting man, I would say the SCOTUS overturns the entire thing, and then we can start over with some common sense approaches to healthcare costs -- finally.

If the court just strikes down just the individual mandate then stratospheric profit driven international insurance corporations will skyrocket rates in order to achieve their extreme profits.

Then, conservative employers will claim that workers are sucking the blood out of their companies, and they’ll insist they work for much lower wages, and without insurance or pensions.

Finally, plutocratic Republicans who’ve purchased power over government will claim that sick people getting medical care and old people receiving pensions are sucking the blood out of government, and they’ll insist that medical care be cut to nothing, and pensions be eliminated.

The conservative employers and plutocratic Republicans will instantly deny this, of course.

Why they even attempt to deny it at this point is really beyond me. It’s not like they’re vulnerable in any way to voter outrage. Their wealthy puppet masters will purchase their seats for them no matter what.

The Congressional Budget Office estimates that eliminating the law’s individual mandate would save $282 billion over 10 years, a figure based on 16 million fewer people signing up for health care through Medicaid, new health exchanges and private insurance.

The CBO is a JOKE when it comes to estimating. They use the numbers given to them by unreliable source and use static calculations instead of dynamic. Look at what the CBO did for the "Big Dig" it was only off by about 10 times.

We need the Supreme Court to do what the moron Obama and the Dimwits in Congress can't figure out. We need to stop paying the Idiot-in-Chief and shut down Congress. Just think of the money we would save!

History will not be kind when they write about our experiment in low expectation while this pathetic moonbat occupied the White House.

The individual mandate could be removed and replaced with a continuous coverage requirement, similar to HIPPA.

As long as an individual has maintained uninterrupted insurance coverage, they should be able to shop for competing plans on a guaranteed-issue, community-rated basis - no tricks, exclusions, loopholes, etc. to discriminate for pre-existing conditions or gender. This should allow for the purchase of new guaranteed-issue, community-rated insurance immediately upon job loss and/or relocation, with no waiting period.

The rest of ACA could remain intact and be adjusted by Congress as needed.

ACA requires our elected members of Congress to access the same insurance options as their constituents. This assures that we all have a reasonable menu of choices in the exchanges because members of Congress will not deny themselves. Apparently, many members of Congress prefer to retain their privileged "cadillac plan" at the exclusion and expense of constituent taxpayers.

If SCOTUS kills ACA, Democrats should run on a platform of providing universal individual health insurance access to the Congressional health plan menu, and make it a full, 100% tax deduction on individual tax returns. Why should members of Congress - and Supreme Court Justices, for that matter - have a privileged health insurance plan that excludes constituents? Why do so many voters tolerate this hypocrisy?

We need the Supreme Court to do what the moron Obama and the Dimwits in Congress can't figure out. We need to stop paying the Idiot-in-Chief and shut down Congress. Just think of the money we would save!

History will not be kind when they write about our experiment in low expectation while this pathetic moonbat occupied the White House.

The individual mandate could be removed and replaced with a continuous coverage requirement, similar to HIPPA.

As long as an individual has maintained uninterrupted insurance coverage, they should be able to shop for competing plans on a guaranteed-issue, community-rated basis - no tricks, exclusions, loopholes, etc. to discriminate for pre-existing conditions or gender. This should allow for the purchase of new guaranteed-issue, community-rated insurance immediately upon job loss and/or relocation, with no waiting period.

The rest of ACA could remain intact and be adjusted by Congress as needed.

Hey Dems, if you had done this right you might have got everyone on board with you.

Instead you came into office with extreme ARROGANCE, puffed up and though you ruled the world. All your BS talk about trying the last administration as "war criminals" when Obama is pretty much following the Bush playbook (Obama isn't the first POTUS to employ drones and missles - and won't be the last) to include RENDITION and ENHANCED INTERROGATION still going on. You ended up royally pizzing everyone off. And Obama led the way in Democrat arrogance, hypocrisy and sanctimony.

Now, they are in a full blown panic. Gone is the supreme confidence.

My how quickly political fortunes can change and how the high and mighty get humbled.